Transforming
food processing
Transforming
food processing
Chief Financial Officer
LINDA JÓNSDÓTTIR
Chief Executive Officer
ÁRNI ODDUR THÓRDARSON
ACTIVE CONSUMERS
ARE LOOKING FOR A
BALANCED DIET
annual retail value of poultry
meat and fish industriesEUR 1,200bnbelong to the rising middle
class worldwide, half in Asia3bn peopleglobal annual growth of
urbanized middle class3-4%
• The global meat, poultry and
fish market at consumer value
is worth an estimated EUR
+1,200bn1, forecasted to grow
an average 3-4% annually until
20262
• The global poultry, meat and
fish processing equipment,
systems, software and
services market size is
estimated at EUR 12bn1
• Main drivers of expected
market growth are underlying
production growth, increased
need for automation,
throughput and yield, as well
as increased focus of
consumers and regulators on
sustainability, food safety,
nutrition, health and wellness
HIGHLY ATTRACTIVE, SECULAR GROWTH TRENDS
Marel focuses on the high growth animal protein processing market valued at an estimated EUR +1,200bn,
thereof EUR 12bn market size for equipment, systems, software and services for poultry, meat and fish
5Source: Company information. 1 Management estimates for 2019. 2 Management estimates.
9.8bn
By 2050
Forecasted to grow annually at an average of
4-6% until 20262
MEAT POULTRY FISH
~EUR 6.6bn1 ~EUR 3.6bn1 ~EUR 1.8bn1
Market size of equipment,
systems, software and services for
poultry, meat and fish processing
from post farm to dispatchANIMAL
PROTEIN
PROCESSING
SOLUTIONS
MARKET SIZE
MARKET
DRIVERS AND
GROWTH
RATES
MEAT POULTRY FISH
ANIMAL
PROTEIN
MARKET SIZE
AND DRIVERSGROWING POPULATION URBANISATION RISING MIDDLE CLASS
EUR
12bn1
EUR +1,200bn1
Marel Poultry53%Marel Meat
32%
Marel Fish13%
Others6
1%
North America29%
Europe46%
Rest of the world25%
Greenfield and projects
Standard equipment
Service and spare parts
FROM START-UP TO GLOBAL LEADER
Since listing in 1992, Marel has continued to gradually expand its playing field to become a leading global provider of
advanced processing equipment, systems, software and services to the poultry, meat and fish industries
MAREL AT A GLANCE KEY STATS 2018 DIVERSE REVENUE MIX (2018 REVENUES, %)
6
By industry
By geography
By business mix
UNITY EXCELLENCE INNOVATION
+6,000 +30employees countries
1,0381,198
2017 2018
+15%
13.7
18.0
20182017
+31%
Revenues
EUR m
EPS
EUR cents
Leverage 2.0x
net debt / adj. EBITDA
EUR 476m
order book2
EBIT margin
adjusted for PPA4
14.6%
EUR 1,184m
orders received3
Free cash flow5
10.1% of revenues
of EUR 3.2bn1
Innovation
6.2% of revenues
Source: Company information, FactSet. Note: 1 Market data as of 5 Sept 2019. 2 The order book reflects Marel’s estimates, as of the relevant order book date, of potential future revenues to be derived from contracts for equipment, software, service and spare parts
which have been financially secured through down payments and/or letters of credit in line with the relevant contract terms. These estimates reflect the estimated total nominal values of amounts due under the relevant contracts less any amounts recognized as
revenues in Marel’s financial statements as of the relevant order book date. 3 Orders received represents the total nominal amount, during the relevant period, of customer orders for equipment, software, service and spare parts registered by Marel during the
relevant period. 4 Operating income adjusted for purchase price allocation (PPA) related costs, including depreciation and amortisation. PPA refers to amortisation of acquisition-related intangible assets. 5 Free cash flow defined as cash generated from operating
activities less tax and net investments (excluding investment in companies). 6 Others include any revenues, result from operations and assets which do not belong to the three core business units.
Service and
spare parts
35% of revenues
VISION
“In partnership with our customers we are transforming
the way food is processed”
Marel’s vision is of a world where quality food is produced
sustainably and affordably
VALUES
WELL POSITIONED IN THE VALUE CHAIN
Today Marel is the only pure play supplier of advanced processing equipment, systems, software and
services to the poultry, meat and fish industries across the three processing stages
7
Breeding
/ Farming
PRIMARY
PROCESSING
SECONDARY
PROCESSING
FURTHER
PROCESSING
Retail
Food Service
RestaurantsFeed Consumer
POST FARM GATE TO DISPATCH
Live animal handling
Stunning
Killing
Scalding / De-hairing
Evisceration
Chilling
...
Cutting / Filleting
Deboning
Weighing / Grading
Portioning
Skinning / Derinding
Inspection
...
Forming
Pumping
Marinating
Preparing
Coating
Heating / Frying / Smoking
…
Source: Company information. Note: 1 Counted as one manufacturing site. 2 Mother site location. 3 Co-location.
ADVANCED, HIGH-END SOLUTIONS SALES AND SERVICE NETWORK 13 MANUFACTURING SITES
+30 Countries I +650 Sales FTEs I +1,350 Service FTEs
Primary
Processing
UNIQUE PURE PLAY PROVIDER
Marel
Current
Presence
Primary
Processing
Secondary
Processing
Further
Processing
Primary
Processing
Secondary
Processing
Further
Processing
FULL-LINE SOLUTIONS PROVIDER…
…ACROSS POULTRY, MEAT AND FISH…
• One-stop-shop for the customer
• Seamless integration More efficiency
• Strong competitive advantage
Secondary
Processing
Further
Processing
…WITH STANDARD AND MODULAR OFFERING…
Marel is a pure play provider of full-line offering, software and services to the poultry, meat and fish
food processing industries
Source: Company information.
... AND MARKET LEADING INNOVA SOFTWARE
• More resilient business model
• Technology transfer across industries
• Better utilisation of resources
• Less engineering work
• Easier to manufacture
• Better serviceability
• Traceability
• Customer operational excellence
• Optimising customer orders
82006 2008 2016
• Good support from
shareholders since listing
on Nasdaq Iceland in
1992
• Growth strategy
announced and agreed at
the 2006 AGM
• Acquisitions of
Scanvaegt and Stork
Food Systems financed
with equity contribution of
EUR 268 million
• MPS, Sulmaq and MAJA
acquisitions financed with
support from banking
partners, strong
operational results and
cash flow
A STRONG TRACK RECORD OF GROWTH
Marel had over 6,000 employees working in +30 countries and EUR 1.2 billion in revenues in 2018,
a stark contrast to its 45 employees and revenues of EUR 6 million at the time of listing in 1992
0
200
400
600
800
1,000
1,200
LISTED ON NASDAQ ICELAND STOCK EXCHANGE SINCE 1992
EUR m
1/3 average
annual organic
revenue growth
2/3 average
annual
acquired
revenue
growth
ORGANIC
GROWTH
ACQUIRED
GROWTH
9Source: Company information.
INVESTING IN INNOVATION
Marel is strategically focused on maintaining technological leadership within the industry to secure
its competitive advantage and support organic growth
INNOVATION INVESTMENT ~6% OF REVENUES INNOVATION ACROSS INDUSTRIES PARTNERSHIP WITH CUSTOMERS
Focused on transferring technology between
industries and leveraging the strong
innovation investments across numerous
product groups, processes and geographies
R&D
commitment of
~6% of revenues
11
The SensorX was originally
developed for the fish industry
and has now been
successfully introduced to the
poultry and meat industries
The i-Cut was developed for
the fish industry, with majority
of the sales now to the poultry
and meat industries
Marel has introduced over 50 new
products to the market in the past 3 years,
with recent examples of cutting edge
product development providing full-line
solutions for customers
Source: Company information.
12
Poultry
Meat
Fish
PROCESSING LINE SPEED YIELD (%)
~6,000
~15,000
1980s Today
6075
1980s Today
~200
~1,200
1980s Today
6778
1980s Today
~12
~270
1980s Today
58
83
1980s Today
…CREATING TANGIBLE VALUE FOR CUSTOMERSINNOVATION DRIVES…
IMPROVED AUTOMATION
bph1
pph2
Source: Company information. Note: 1 Birds per hour. 2 Pigs per hour. 3 Kilograms per man-hour.
kg/h3
PROCESS CONTROL
FOOD SAFETY
STANDARDISATION
TRACEABILITY
ANIMAL WELLBEING
SUSTAINABILITY
UPTIME PERFORMANCE
2.5x
6.0x
22.5x
+15
+11
+25
BENEFITS OF INNOVATIONSignificant improvements in efficiency and yield are value enhancing for customers
UNIQUE INNOVA SOFTWARE PLATFORM
Source: Company information.
Note: 1 Enterprise resource planning. 13
Marel has developed Innova, a unique proprietary software platform enabling device control, as well as
efficient factory and process management with over 2,000 installations world-wide
EMBEDDED SOFTWARE
• Device functionality creating superior
value for food processors
• Examples include image recognition and
portioning optimisation
• Factory and production management with
automated real-time decisions to
maximise value, safety and order
fulfilment
• Examples include ERP1 integration,
traceability, planning and multi-site overall
equipment effectiveness (“OEE”)
CONNECTED BUSINESS
“Innova is part of the DNA
of our operation”
36–40 hours
processing time
75%
compliance rate
Less than
20 hours
99.5%
compliance rate
“We were blind before”
“We are able to trace production all the way
to finished products. Now we can see things
as they happen and manage them”
CONNECTED SOLUTIONS
• Integrated with hardware to enable
controlling, monitoring and operating
multiple devices as a single system
• Examples include quality control, yield
management and automated operation
10 of Top 10
Salmon producers
in the world
3 of Top 5
Meat
producers
in the world
4 of Top 5
Poultry
producers
in the world
8 of Top 10
Whitefish
producers
in the world
INNOVATIVE CUSTOMERS
14
In partnership with our customers we are
transforming the way food is processed
Marel‘s vision is of a world where quality food is
produced sustainably and affordably
• Example from a ten-year
relationship with a
customer in the meat
industry
• Customer starts in primary
processing and then
expands into secondary
processing
• After sales revenue from
spare parts and service
starts around year three
CUSTOMER RELATIONSHIPS
Marel builds strong and long lasting relationships with its customers
15
• Large, diversified global
customer base comprised
of the world’s leading
poultry, meat and fish
processors
• Customer base ranging
from large international
leaders to local processors
• Top 10 customers account
for less than 20% of total
revenues with the single
largest customer
accounting for less than 5%
• Active customer accounts in
over 140 countries world-
wide
• Strong customer retention –
list of top customers is fairly
consistent between years
LARGE AND DIVERSIFIED GLOBAL CUSTOMER BASE
Marel’s strong brand and unique product offering cater to its loyal blue-chip customer base
SAMPLE GLOBAL CUSTOMERS
Source: Company information. 16
• Revenues were a record EUR
1.2bn in 2018, up 15.4% from
the previous year (of which
12.5% was organic growth)
- In 1H19, orders received
were EUR 635m, up 2.4%
compared to 1H18
• Book-to-bill ratio in 2Q19 was
0.95, and order book stood at
36% of 12 month trailing
revenues
• Leverage at 0.6x at the end of
1H19 following the 15% share
capital increase in connection
with the dual listing. Financial
strength to support strategic
growth in line with the
company´s growth targets
• Paid out around EUR 37m in
dividends, 30% of net result for
the year 2018
SOLID GROWTH AND RESILIENT PROFITABILITY
Consistent track record of results
REVENUES
EUR m
ORDERS RECEIVED2
EUR m
ORDER BOOK3
EUR m
ADJ. EBIT MARGIN1
%
FREE CASH FLOW4
EUR m
LEVERAGE
Net debt / Adj. EBITDA1
Source: Company information. Note: 1 EBIT or EBITDA adjusted for PPA related costs, including depreciation and amortisation from 2016 - 2019 and refocusing costs in 2014 and 2015 relating to “Simpler, Smarter, Faster” programme.
PPA refers to amortisation of acquisition-related intangible assets. 2 Orders received represents the total nominal amount, during the relevant period, of customer orders for equipment, software, service and spare parts registered by
Marel during the relevant period.3 The order book reflects Marel’s estimates, as of the relevant order book date, of potential future revenues to be derived from contracts for equipment, software, service and spare parts which have been
financially secured through down payments and/or letters of credit in line with the relevant contract terms. These estimates reflect the estimated total nominal values of amounts due under the relevant contracts less any amounts
recognized as revenues in Marel’s financial statements as of the relevant order book date. 4 Free cash flow defined as cash generated from operating activities less tax and net investments. 5 Pro-forma adjusting for the MPS acquisition
orders received and revenues were EUR 1,013m and EUR 983m in 2016, respectively.
18
755 8251,006
1,144 1,184
620 635
2014 2015 2016 2017 2018 '18 '19
1H
713819
970 1,0381,198
585 651
2014 2015 2016 2017 2018 '18 '19
1H
175 181
350
472 476523
459
2014 2015 2016 2017 2018 '18 '19
1H
2.1x
1.1x
2.3x 1.9x 2.0x
1.8x
0.6x
2014 2015 2016 2017 2018 '18 '19
1H
76 81
131153
121
7042
2014 2015 2016 2017 2018 '18 '19
1H
6.8
11.814.4 15.2 14.6 14.9 14.9
2014 2015 2016 2017 2018 '18 '19
1H
5 5
BALANCED BUSINESS MIX
Marel is a leading global provider of advanced food processing equipment, systems, software and
services with balanced exposure to all three animal protein industries and processing stages
19Note: All financial numbers relate to the 2018 audited Financial Statements. Other segment account for around 2% of the revenues. 1 Operating income adjusted for PPA related costs, including depreciation and amortisation. PPA refers to
amortisation of acquisition-related intangible assets.
2018 revenues2018 EBIT margin
adjusted for PPA1
EUR 387m 11.3%
MEAT
32%
2018 revenues 2018 EBIT margin
EUR 159m 7.9%
FISH13%
2018 revenues 2018 EBIT margin
EUR 638m 18.4%
POULTRY53%
% of 2018
revenues:
% of 2018
revenues:
% of 2018
revenues:
• Most advanced industry within Marel
• Full-line offering on a standardised and
modular basis
• With the most complete product range
and one of the largest installed bases
world-wide, competitive position remains
strong
• Full-line product offering following
acquisitions of MPS, Sulmaq and MAJA
• Focus going forward on increased
standardisation and modularisation, as
well as upselling and cross-selling
• Management is targeting medium and
long-term EBIT margin expansion for
Marel Meat
• Focus on full-line offering for wild
whitefish, farmed salmon and farmed
whitefish
• Aim to fill certain primary processing
applications with innovation and / or M&A
• Management is targeting medium and
long-term EBIT margin expansion for
Marel Fish
0%
3%
6%
9%
12%
15%
18%
21%
24%
0
5
10
15
20
25
30
35
40
45
50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Adjusted EBIT % margin
STRONG PROFITABILITY PERFORMANCE
Solid operational performance with strong earnings per share (EPS) acceleration and EBIT margin
adjusted for PPA improvement following restructuring programme “Simpler, Smarter, Faster” in 2014/2015
Source: Company information.
Note: 1 Adjusted for PPA related costs, including depreciation and amortisation from 2016 – 2019 and refocusing costs in 2014 and 2015 relating to “Simpler, Smarter, Faster” programme. PPA refers to amortisation of acquisition-related.
intangible assets. 2 Adjusted EBIT in Q4 2015 is not adjusted for 3.3m cost related to the MPS acquisition, which was described in the Company’s Q4 2015 report and recorded in general and administrative expenses.
EPS GROWTH FASTER THAN REVENUES
Trailing twelve months, EUR cents
RESILIENT ADJUSTED EBIT DEVELOPMENT1
EUR m
Q1 Q2 Q3 Q40
2
4
6
8
10
12
14
16
18
20
1.6
10.6
7.9
19.6
13.7
+396%
+34%
+29%
+31%
Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4
20
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
2
2019
18.0
2019
Q1 Q2
+9%
FINANCIAL TARGETS AND DIVIDEND POLICY
Marel is targeting 12% average annual revenue growth from 2017-2026 through market
penetration and innovation, complemented by strategic partnerships and acquisitions
FY17 FY18 1H19 TARGET
Revenue
growth1
Organic 5.0% 12.5% -
12%
average annual
revenue growth in
2017-20261
Market conditions have been exceptionally favorable in recent years but are
currently more challenging in light of geopolitical uncertainty. Marel enjoys a
balanced exposure to global economies and local markets through its global
reach, innovative product portfolio and diversified business mix
In the period 2017-2026, Marel is targeting 12% average annual revenue growth
through market penetration and innovation, complemented by strategic
partnerships and acquisitions
Up to 2026, management forecasts 4-6% average annual market growth.
Marel aims to grow organically faster than the market, driven by innovation and
growing market penetration
Solid operational performance and strong cash flow is expected to support 5-7%
revenue growth on average by acquisitions
Acquired 2.1% 2.9% -
Total 7.1% 15.4% 11.3%
YoY
Innovation investment 5.6% 6.2% 6.3% ~6% of revenuesTo support new product development and ensure continued competitiveness of
existing product offering
Earnings per
share
(EUR cent)2
13.7 18.0 9.9EPS to grow faster
than revenuesMarel’s management targets Earnings per Share to grow faster than revenues
Leverage 1.9x 2.0x 0.6xNet debt / EBITDA
2-3xThe leverage ratio is targeted to be in line with the targeted capital structure of the
company
Dividend policy 30% 30% - 20-40% of net profitDividend or share buyback targeted at 20-40% of net profits. Excess capital used
to stimulate growth and value creation, as well as payment of dividends / funding
share buybacks
21Source: Company information. Note: 1 Growth is not expected to be linear but based on opportunities and economic fluctuations. Operational results may vary from quarter to quarter due to general economic developments, fluctuations in orders
received and timing of deliveries of larger systems. 2 Trailing twelve months, EUR cents.
KEY TAKEAWAYS
ATTRACTIVE
END-MARKETS
• Sizeable market with
positive outlook
supported by long-
term, secular growth
trends
• Fragmented market
with strong
opportunities for
consolidation and
scale expansion
UNIQUE
BUSINESS MODEL
• A truly global pure
play provider aiming
to cover the full
processing value
chain for poultry, meat
and fish solutions
• Strong brand and
unique product
offering catering to
loyal blue-chip
customer base
TECHNOLOGY AND
INNOVATION
LEADERSHIP
• Technology
leadership is an
integral part of Marel’s
strategy
• Marel’s overarching
Innova software
platform ensures
optimal yield and
throughput
GLOBAL SCALE
AND SCOPE
• Large and growing
installed base driving
highly attractive
service and spare
parts
• Global sales and
service network
ensures local
presence and support
PROVEN
TRACK RECORD
• Proven historical
performance in
revenue growth,
profitability and EPS
• Strong cash flow
generation enabling
investments in the
business creating
shareholder value
POSITIONED
FOR CONTINUED
SUCCESS
• Clear and defined
organic and acquired
growth strategy to
achieve ambitious
performance targets
• Experienced
management team
with proven track
record
22
2019E 2026E
Source: Company information.
Note : 1 Management estimates. 2 2015 EBIT adjusted for refocusing cost. 3 Operating income adjusted for PPA related costs, including depreciation and amortisation. PPA refers to amortisation of acquisition-related intangible
assets.
Marel is a leading global provider of advanced food processing equipment, systems, software and
services to the poultry, meat and fish industries, and is poised for continued success
Adjusted EBIT Margin3
EXPECTED GROWTH FOR FOOD PROCESSING
EQUIPMENT IN POULTRY, MEAT AND FISH
+4–6%1
CAGR
Marel’s presence
Q&AÁRNI ODDUR THÓRDARSON – CEO
LINDA JÓNSDÓTTIR – CFO
VICKI PREIBISCH – INVESTOR RELATIONS
APPENDIX I
Q2 2019 FINANCIAL PERFORMANCE
• Orders received in 2Q19 were
EUR 311m, up 6.9% YoY
• Revenues in 2Q19 were
EUR 327m, up 10.0% YoY
• Book-to-bill ratio was 0.95 in
the quarter compared to 0.99 in
1Q19
• Order book was 36% of trailing
12 months revenues and
primarily constitutes greenfield
projects and large projects with
long lead times
• Significant proportion of Marel's
revenues derived from the
service and spare parts
business, in total around 35%
of 2Q19 revenues
• A dynamic shift in greenfield
orders with growth in Asia, in
particular in China, while
Europe and North America
were softer
STRONG TOP-LINE GROWTH AND SOLID ORDERS RECEIVED
Healthy mix of revenues deriving from greenfields, modernisation, and standard equipment,
around 35% of revenues derive from service and spare parts sales on the installed base world-wide
0
50
100
150
200
250
300
350
400
0
50
100
150
200
250
300
350
400
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Revenues Orders received
2016
Source: Company information.
2017 2018
25
REVENUE AND ORDER EVOLUTION
EUR m
2019
• Revenues increased by 10.0%
YoY in 2Q19
• Gross profit margin at 39.9%
(2Q18: 38.8%)
• Operational expenses
- R&D at 6.2% (2Q18: 5.6%)
- S&M at 12.2% (2Q18: 11.3%)
- G&A at 6.3% (2Q18: 7.3%)
• EBIT1 increasing by 14.8% YoY.
EBIT1 margin of 15.2% in 2Q19
(2Q18: 14.6%)
• Fluctuation in adjusted EBIT
margins quarter on quarter can
be expected as timing of big
projects and product mix can
have an effect
ROBUST OPERATIONAL PERFORMANCE
Strong revenue growth in the quarter of 10.0% YoY with a
healthy profit margin of 15.2% EBIT1
Source: Company information.
Note: 1 Operating income adjusted for purchase price allocation (PPA) costs related to acquisitions. 2 Adjusted for PPA costs related to acquisitions. from 2016 – 2019 and refocusing
costs in 2014 and 2015 relating to “Simpler, Smarter, Faster” programme. PPA refers to amortisation of acquisition-related. (in)tangible assets. 3 Adjusted EBIT in Q4 2015 is not
adjusted for 3.3m cost related to the MPS acquisition, which was described in the Company’s Q4 2015 report and recorded in general and administrative expenses.
0.0%
3.0%
6.0%
9.0%
12.0%
15.0%
18.0%
21.0%
24.0%
0
5
10
15
20
25
30
35
40
45
50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Adjusted EBIT % margin
2014 2015 2016 2017 2018
26
ADJUSTED EBIT EVOLUTION2
EUR m
3
2019
350
1,144 1,038
472
1,184 1,198
476
323 325
475
311 327
459
16
2016 2017 2018 Q1 2019 Q2 2019
IFRS adjustment3• Order book consists of orders
that have been signed and
financially secured with down
payments and / or letters of
credit for the outstanding
amount
• Meat projects have in general
longer lead times than poultry,
while fish projects have shorter
cycles
• Vast majority of the order book
are greenfield projects while
spare parts and standard
equipment run faster through
the system
• Low customer concentration
with no customer accounting
for >5% of the total revenues
• Well diversified order book by
size with widely spread delivery
times
SOLID ORDERS RECEIVED AND REVENUES CLOSE TO RECORD
Order book at 36% of trailing 12 months revenues
Source: Company information. Note: 1 The order book reflects Marel’s estimates, as of the relevant order book date, of potential future revenues to be derived from contracts for equipment,
software, service and spare parts which have been financially secured through down payments and/or letters of credit in line with the relevant contract terms. These estimates reflect the
estimated total nominal values of amounts due under the relevant contracts less any amounts recognised as revenues in Marel’s financial statements as of the relevant order book date. 2
Orders received represents the total nominal amount, during the relevant period, of customer orders for equipment, software, service and spare parts registered by Marel. 3 One-time effect
related to the adoption of IFRS 15. 4 Including acquired order book of Sulmaq of EUR 17m. 5 Including acquired order book of MAJA of EUR 2m.
Order book1 Orders received2 Revenues
4 5
27
Order book % trailing 12
month revenues36% 45% 40% 39% 36%
Book-to-bill ratio 1.04x 1.10x 0.99x 0.99x 0.95x
ORDER BOOK
EUR m
• Total operating working
capital in 2019 changed
close to EUR 34m over the
quarter mostly due to
increase in contract assets
and inventories
• Inventories rising partly
because of volume and
partly because of increase in
fast moving parts to secure
shorter delivery times
• The work-in-progress
(contract assets) build up in
the quarter is a timing matter
while the inventory build up
is a special initiative to
shorten lead times in spares
and standard equipment
• Cash balance increasing
because of the equity
issuance around the listing,
part of the funds used to
repay revolving facilities
In EUR million 30/06 2019 31/12 2018 Change
Property, plant and equipment 178.5 175.6 +1.7%
Right of use assets 35.7 33.3 +7.2%
Goodwill 644.1 641.3 +0.4%
Intangible assets (excluding goodwill) 259.3 267.0 -2.9%
Investments in associates 1.8 000 - +100.0%
Trade and other receivables 3.2 3.2 -
Derivative financial instruments 1.4 1.3 +7.7%
Deferred income tax assets 15.7 10.2 +53.9%
Non-current assets 1,139.7 1,131.9 +0.7%
Inventories 165.3 149.9 +10.3%
Contract assets 59.4 44.0 +35.0%
Trade receivables 142.2 138.8 +2.5%
Other receivables and prepayments 61.8 45.0 +37.3%
Cash and cash equivalents 276.7 56.3 +391.5%
Current assets 705.4 434.0 +62.5%
TOTAL ASSETS 1,845.1 1,565.9 +17.8%
BALANCE SHEET: ASSETS
Q2 2019 Condensed Consolidated Interim Financial Statements
HIGHLIGHTS ASSETS
28
• Leverage ratio 0.6x net debt
/ EBITDA at end of 2Q19
following the share capital
increase
• Financial strength to support
strategic growth in line with
the company‘s growth
targets
• Contract liabilities
(production contracts) reflect
down payments from
customers on projects that
will be produced
BALANCE SHEET: EQUITY AND LIABILITIES
HIGHLIGHTS EQUITY AND LIABILITIES
In EUR million 30/06 2019 31/12 2018 Change
Group equity 911.7 560.9 +62.5%
Borrowings 342.6 429.3 -20.2%
Lease liability 27.5 27.1 +1.5%
Deferred income tax liabilities 56.9 57.3 -0.7%
Provisions 10.4 9.2 +13.0%
Other liabilities 3.1 3.0 +3.3%
Derivative financial instruments 0.4 1.4 -71.4%
Non-current liabilities 440.9 527.3 -16.4%
Contract liabilities 210.1 212.1 -0.9%
Trade and other payables 222.7 217.0 +2.6%
Current income tax liabilities 18.3 9.3 +96.8%
Borrowings 24.8 24.8 0.0%
Lease liability 8.5 6.7 +26.9%
Provisions 8.1 7.8 +3.8%
Current liabilities 492.5 477.7 +3.1%
Total liabilities 933.4 1,005.0 -7.1%
TOTAL EQUITY AND LIABILITIES 1,845.1 1,565.9 +17.8%29
Q2 2019 Condensed Consolidated Interim Financial Statements
• Cash flow, both operational and
free cash flow unusually low in
the quarter
• Investments were at a lower
level than previous quarters
with EUR 9.8m (2Q18: EUR
12.6m) as facility investments
are scaling down after a period
of significant investments
• Book-to-bill ratio of 0.95 and
timing of work in progress
negatively impact cash flow
• Net debt decreased by EUR
345.8m between quarters and
part of the cash from the equity
issue was used to repay
revolving loan facilities
• In June 2019, Marel signed an
agreement to acquire a minority
stake in Canadian software
company Worximity Technology
Inc.
CASH FLOW
In the quarter, main impact on cash flow was due to timing of work in progress and taxes paid
30
CASH FLOW
EUR m
Note: 1 Free cash flow defined as cash generated from operating activities less tax and net investments. 2 Excluding transaction costs of EUR 8.6m. 3 Currency effect, change in capitalized finance charges and cost of lease liabilities.
Cash
generated
from
operating
activities
22.3
EBIT
46.9
Non cash
items
14.2
Changes in
working
capital
38.8
Tax
16.0Investing
activities
8.0
Free cash
flow1
-1.7
Net finance
costs
4.1
Investment in
associates
(Worximity)
1.8
New shares
issued2
361.4
Other
items3
8.0
Decrease in
net debts
345.8
EARNINGS PER SHARE1
EUR cents per share
KEY PERFORMANCE METRICS
Proven track record of earnings results and value creation
FREE CASH FLOW2
EUR m
Source: Company information.
Note: 1 Basic earnings per share, trailing twelve months. 2 Free cash flow defined as cash
generated from operating activities less tax and net investments.
NET DEBT / EBITDA
Leverage (x)
Consistent and high EPS growth trajectory
• Earnings per share expected to increase
faster than revenue growth subject to
continuing operational improvement and
value creation
31
Q2 Q2 Q2
Stable leverage in recent years
• Net debt / EBITDA at 0.6x at the end of
2Q19 following the share capital increase in
connection with the dual listing
• Financial strength to support strategic
growth in line with the company‘s growth
targets
Free cash flow was EUR -1.7m (2Q18: EUR
34.8m)
• Operational cash flow before taxes and
investment is at low level mainly due to
increase in work-in-progress and the
increase in inventories
• Taxes paid was EUR 16m in 2Q19,
compared to EUR 9m in 2Q18
• Marel continues to invest in the business to
prepare for future growth with the objective
to achieve its full potential
131.2
152.5
120.6
34.8
2016 20182017 20192018
10.6
13.7
18.016.5
19.6
2016 20182017 2018 2019
2.3x
1.9x2.0x
1.8x
0.6x
20172016 2018 2018 2019
-1.7
APPENDIX II
LEADERSHIP TEAM
EXPERIENCED MANAGEMENT TEAM
Well respected and seasoned management team with extensive experience within the broader
food processing sector
Source: Company information.
Árni Oddur Thórdarson
Chief Executive Officer since 2013
14 years with Marel
14 years within industry
BU
SIN
ES
S U
NIT
LE
AD
ER
SO
PE
RA
TIO
NA
L L
EA
DE
RS
Ulrika Lindberg
Executive Vice President of Service
1 year with Marel / 22 years industry related
Einar Einarsson
Executive Vice President of Global Markets
16 years with Marel / 16 years industry related
Árni Sigurdsson
Executive Vice President of Strategy and Development
5 years with Marel / 8 years industry related
Linda Jónsdóttir
Chief Financial Officer
9 years with Marel / 9 years industry related
Roger Claessens
Managing Director of Marel Poultry
18 years with Marel / 18 years industry related
Sigurdur Ólason
Managing Director of Marel Fish
12 years with Marel / 30 years industry related
David Wilson
Managing Director of Marel Meat
21 years with Marel / 24 years industry related
Jesper Hjortshøj
Managing Director of Marel Further Processing
13 years with Marel / 16 years industry related
Vidar Erlingsson
Executive Vice President of Innovation
19 years with Marel / 19 years industry related
Folkert Bölger
Executive Vice President of Global Supply Chain
3 years with Marel / 3 years industry related
Davíd Freyr Oddsson
Executive Vice President of HR
8 years with Marel / 8 years industry related
33
ÁSTHILDUR MARGRÉT
OTHARSDÓTTIR1
Chairman
of the Board
MARGRÉT
JÓNSDÓTTIR
Board Director
TON VAN DER LAAN1
Board Director
BOARD OF DIRECTORS
All seven Board members are considered independent of the Company. Furthermore, five of the
Board members are considered independent of the Company’s major shareholders
34Note: 1 Considered independent of the company’s major shareholders.
ANN ELIZABETH
SAVAGE1
Board Director
ÁSTVALDUR
JÓHANNSSON1
Board Director
Ann Savage has
previously served as
the Technical Director
of Bakkavor Group, a
leading international
manufacturer of fresh
prepared foods. She
was also a member of
the company's
management board
ÓLAFUR S.
GUDMUNDSSON
Board Director
ARNAR THOR
MÁSSON1
Vice-Chairman
of the Board
Ton van der Laan has
extensive experience from
executive roles in the food
industry. He is a non-
executive Board Member of
Vion Foods, Royal de Heus,
Dümmen Orange and the
Rainforest Alliance.
Previously, he was CEO of
Nidera Capital in the
Netherlands and Argentina
and has held several
executive roles at Unilever
Margrét Jónsdóttir is
the Managing Director
of Operations for Eyrir
Invest hf. Previously,
she was the Director of
Finance at Edda
Publishing. She also
worked as the Director
of Finance at
Kreditkort/MasterCard
and the Manager of
Accounts at FBA
Investment Bank
Ástvaldur Jóhannsson
has served in various
senior management
positions at Össur hf.,
a global non-invasive
orthopedics corporation
and as the Executive
Director of the
International Division of
Valitor hf., an e-
commerce payment
solutions and services
provider
Dr. Ólafur S. Gudmundsson
is the Head of Discovery,
Pharmaceutics at Bristol-
Myers Squibb, a global
biopharma company. He has
previously held various senior
level management positions
within R&D in the
pharmaceutical industry, both
for Bristol-Myers Squibb and
Genentech Inc
Arnar Thor Másson is currently the
Alternate Director at the European
Bank for Reconstruction and
Development in London and serves
as the Chairman of Marel’s audit
committee. He served as Director
General of the Department of
Administrative Development at the
Prime Minister’s Office in Iceland
and Deputy Director General of the
Financial Management Department
at the Ministry of Finance
Ásthildur Margrét Otharsdóttir is an
independent consultant and a board
member of several companies. She
served as the Director of Treasury and
Corporate Development at Össur hf.
and as a Senior Account Manager at
Kaupthing Bank (now Arion Bank), as
well as a consultant at Accenture in
Copenhagen. She is the Chairman of
the Board of the investment fund
Frumtak Ventures and a former member
of the Board of Directors of Icelandair
Group
Statements in this press release that are not based on historical facts are
forward-looking statements. Although such statements are based on
management’s current estimates and expectations, forward-looking statements
are inherently uncertain.
We therefore caution the reader that there are a variety of factors that could
cause business conditions and results to differ materially from what is
contained in our forward-looking statements, and that we do not undertake to
update any forward-looking statements.
All forward-looking statements are qualified in their entirety by this cautionary
statement.
Statements regarding market share, including those regarding Marel’s
competitive position, are based on outside sources such as research institutes,
industry and dealer panels in combination with management estimates.
Where information is not yet available to Marel, those statements may also be
based on estimates and projections prepared by outside sources or
management. Rankings are based on sales unless otherwise stated.
FORWARD-LOOKING STATEMENTS MARKET SHARE DATA
DISCLAIMER